On 19 February 2003, the Management Board of Swiss International Air Lines Ltd ("SWISS") adopted a package of measures which provided for the decommissioning of up to 18 aeroplanes and the downsizing of about 620 jobs. At its meeting of 24 February 2003, the Board of Directors of SWISS decided to reduce its fleet by 20 aeroplanes and to cut 700 jobs. Between 5 p.m. and 5.30 p.m. on 25 February 2003, prior to the media conference that took place on the same day, various business partners of SWISS were contacted by SWISS executives by phone and informed orally of key data regarding the measures.
According to Art. 72 of the Listing Rules of the SWX Swiss Exchange, the issuer must inform the market of any price-sensitive facts which arise in its sphere of activity and are not of public knowledge. Price-sensitive facts are new facts which, because of their considerable effect on the issuer's assets and liabilities or financial position or on the general course of business, are likely to result in substantial movements in the price of the securities. It is enough for the new fact to have the potential to result in substantial movements in the price of the securities. It is not important whether or not the price moves substantially after the fact is made known.
The decision reached by the Board of Directors of SWISS on 24 February 2003 constituted a new fact that was unknown to the public, since specific numbers were provided regarding the cost-cutting measures. The rumours circulating in the market were close estimates of the extent of the measures, but they cannot be considered to have carried the weight of factual knowledge. However close the rumours may have come to the actual measures, they cannot be considered to have been a substitute for the issuer's obligation to disclose pursuant to Art. 72 LR.
The communication measures of an issuer must take into account the aim of transparency and equal opportunity for all market participants. Listed companies are obligated not only towards their shareholders and employees, but also towards the general public, which has a right to fair, i.e. timely and relevant, receipt of information. Selective communication of price-sensitive facts that are subject to the obligation to disclose pursuant to Art. 72 para. 1 LR cannot be justified.
Art. 72 para. 4 LR does not prohibit important business partners from being informed of price-sensitive facts before the public as long as such a communication occurs outside trading hours and does not give the business partners an advantage over the public. Staggered disclosure of a possibly price-sensitive fact is no reason for censure if at the start of trading on the next trading day all market participants are aware of the fact. However, the early disclosure of information to business partners prior to close of trading is a clear violation of the principle of equal treatment set out under Art. 72 para. 4 LR.
The Executive Committee of the Admission Board of the SWX has concluded that SWISS neglected its duty to inform the public of price-sensitive facts and to ensure equal treatment of market participants pursuant to Art. 72 para. 4 LR by giving early information on a potentially price-sensitive fact only to a few business partners during trading hours on 25 February 2003.
